Strategies for Junior Mining Investors: The Whites of Their Eyes

By: Louis James | Thu, Nov 4, 2010
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"Don't fire until you see the whites of their eyes."

Most Americans were taught in school that William Prescott, commander of the colonial forces on Bunker Hill, gave this order to his men on the morning of June 17, 1775, just before the British attacked them.

Some may even remember that while the British took the hills, they did so at such great cost, it wasn't much of a victory. The American forces repelled the British twice and were finally overwhelmed when they ran out of ammunition - an outcome that obviously concerned Prescott and provoked his order to conserve ammunition. It was vital to use each shot as effectively as possible.

I think of this often when contemplating investing, because I sometimes feel an urge to get all of my investment cash deployed NOW. I might miss the next big uptick! And even if not, modest double-digit gains are still better than money sitting in the bank. This urge gets strong when the market gets hot, as it has been over the past months - look at all the gains I missed!

But the best speculations, as Doug Casey likes to remind us, are when the perfect pitch comes sailing across home plate, cheap and with great upside. There are no called strikes, so it only makes sense to wait and swing only when it'd be hard to miss, hard to get hurt, and there's clear out-of-the-ballpark potential.

Or, as Doug also likes to say, you can't kiss all the girls. Nor should you try; the consequences in real life of attempting to kiss every girl you meet would be... nasty, brutish, and short.

Returning to my original metaphor, I don't want to pull the trigger on a deal until I see the whites of their eyes - i.e., until everything is lined up for maximum effectiveness. Or, as I've put it before: "Buy Low, Sell High" is a much better strategy than "Buy High, Sell Higher."


Strategy vs. Tactics for Speculators

Speaking of military metaphors, I frequently refer to strategy and tactics in my writing. Last June, I gave a talk on strategy vs. tactics at the Cambridge House conference in Vancouver, explaining in greater detail how these concepts can be useful to speculators. With gold recently reaching almost $1,400, making the blood pound heavily in so many speculators' veins, I think it's a good time to spell those thoughts out, lest any of us get carried away and suffer a lapse of discipline.

First, it helps to understand that these terms are not interchangeable. The U.S. military defines strategy as being:

The art and science of employing the armed forces of a nation to secure the objectives of national policy by the application of force or the threat of force.

Tactics, on the other hand, are defined along these lines:

The military science that deals with securing objectives set by strategy, especially the technique of deploying and directing troops, ships, and aircraft in effective maneuvers against an enemy.

My way of summarizing these ideas:

Why you do it, of course, is your goal. That might be conquest or freedom, for armed forces, and financial independence or "drop dead money" for investors.

For example:

This may sound like an overly philosophical approach to giving investment advice, but I firmly believe that one size does not fit all. If you're to have any hope of sticking with your strategy when the tactical realities you face are rough, you've got to know that you are capable of executing your plan. "Know thyself."

Strategies to Consider

What's the best strategy for you? As above, one size does not fit all, but here are some broad ideas for you to consider:

Some of these ideas can be mixed and matched, some not. There are many more possibilities and variations. The important thing is to sit down with these ideas and a fresh cup of coffee one morning, or do whatever you need to do to carve out some quiet time when your mind is the most creative and energetic.

State your goal to yourself - it's very important to have a goal you can actually write down in words. Be specific; a financial goal should include a specific money target.

Then decide what strategy among those you are capable of implementing best achieves your goal. Your strategy should evolve with changing market conditions, but only you can determine what the basic approach is that will work for you in achieving your goal.

It's very important to have a plan to follow - with a strategy you can articulate and tactics you know you can execute. Such clarity is a huge benefit to investors, especially that bold breed that's willing to call themselves speculators. It's the backbone that helps us stand firm as contrarians, and buy when everyone else is selling (low) and sell when everyone else is buying (high).

And remember to hold your fire until you see the whites of their eyes!

 


No one is better than Louis at devising strategies for investing in precious metals juniors - strategies that have enormously benefitted the subscribers of Casey's International Speculator. It's no coincidence that in 2009 every single stock he picked was a winner... for an average portfolio gain of 75.5%. And just in the first half of 2010, subscribers locked in gains of 110.4%... 128.8%... even 266.1%. You can it now risk-free for 3 full months - or your money back. Details here.

 


 

Louis James

Author: Louis James

Louis James
Senior Editor Metals Division
Casey Research, LLC.

Louis James

Louis James' background in physics, economics, and technical writing prepared him well for his role as senior editor of the International Speculator and Casey Investment Alert. Like Doug Casey, Louis constantly travels the world, visiting highly prospective geological targets, grilling management and company geologists, and interviewing natives in a variety of languages to find out what they really think (he's fluent in French and Spanish, and speaks a little German and Russian).

Whether it's days of back-to-back meetings with mining company executives in Vancouver, pounding on rocks in the Democratic Republic of the Congo, examining drill core in Argentina, or eating food with names he can't pronounce with local miners in China, Louis is constantly looking for the next double-your-money winner.

He evaluates dozens of companies every month, conducts due diligence of only the best, and then compares notes with Doug in order to bring only those most likely to provide rapid high returns to our subscribers' attention. Louis also reads all the press releases, financial statements, and an enormous quantity of related information to keep track of all of our mineral companies and has become something of a walking database on same.

Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained herein is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the publisher and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. Doug Casey, entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications. Corporate policies are in effect that attempt to avoid potential conflicts of interest, and resolve conflicts of interest that do arise in a timely fashion. No portion of this web site may be extracted or reproduced without permission of the publisher.

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